March Report

The Fund rose 0.9% during March, taking the return for the last 12 months to 54.8%.

Portfolio Managers James McDonald and Jeremey Bendeich recently featured in the AFR’s latest article ‘Top fundies list reveals turnaround for ESG, mid-cap investors‘. The feature highlights the Fund’s exceptional 32.1% return in the first quarter of 2024, contrasting the recent struggles of global and Australian-listed small-cap stocks. The Fund’s success stemmed from strategic investments in Australian-listed healthcare and biotech companies, as well as commodity-exposed firms, leveraging geopolitical tensions to its advantage.

Top Holdings (alphabetically)

Brazilian Rare Earths Ltd.

Australia

Materials

Provides rare earth elements mining services

Clarity Pharmaceuticals Ltd

Australia

Health Care

Clarity Pharmaceuticals Limited operates as a radio-pharmaceutical company. The Company focuses on the developing targeted therapies for the treatment of cancer and other serious diseases. Clarity Pharmaceuticals serves customers worldwide.

Genetic Signatures Ltd

Australia

Health Care

Genetic Signatures Ltd. is a research company, which engages in the identification and commercialization of individual genetic signatures for the diagnosis of infectious diseases. It is also involved in the sale of associated products into the diagnostic and research marketplaces. Its products include the treatment for gastrointestinal infections, respiratory, sexual health, anti-microbial resistance, meningitis, and tropical disease. It operates in the following geographical segments: Asia Pacific, Europe, Middle East, and Africa (EMEA), and Americas. The company was founded by Robert J. Birrell, Christopher M. Abbott, and Geoffrey Grigg on February 15, 2001 and is headquartered in Newtown, Australia.

Immutep Ltd

Australia

Health Care

Immutep Limited operates as a biotechnology company. The Company focuses on developing novel immunotherapy treatments for cancer and autoimmune disease. Immutep offers its services worldwide.

IperionX Ltd

Australia

Materials

IperionX Limited focuses on sustainable mineral and material supply chains. The Company develops low carbon titanium for advanced industries including space, aerospace, electric vehicles, and 3D printing. IperionX serves customers worldwide.

Australian molecular test company Genetic Signatures rose 21% after fund manager Regal announced a 5% holding in the company. The company is awaiting approval of an enteric protozoan test (gut bugs) by the US FDA which could come out by mid-year. This event will be a major catalyst for the company as we expect rapid uptake of the product in an underserved market. We have written more extensively on this product over recent months.

Australia and US dual-listed company Opthea rose 16% on expectations that it will soon complete enrollment of its two major phase 3 studies for lead product OPT-302, with topline results due by mid 2025. The company also presented at several healthcare conferences in the USA.

US listed hospital operator Tenet Healthcare rose 16.5% during the month and 45% over the last three months after announcing the sales of five hospitals for USD 3bn, which has allowed it to significantly pay down its debt and buy back shares. The company had previously traded at a significant discount to larger rival HCA due to its high gearing.

Last month we wrote that German listed event ticketing agency CTS Eventim (the Live Nation of Europe) reported strong preliminary Q4 figures, which significantly exceeded already upgraded 2023 forecasts. In late March, the company reported its full results which provided more details and an outlook for 2024. Notably, the guidance for 2024 exceeded analyst forecasts and still looks conservative given underlying momentum in the business. We continue to hold the stock due to very positive consumer demand across all price points. In addition, their strong balance sheet has and is likely to enable strategic value-additive acquisitions. The stock is still trading on a depressed multiple compared to history with potential further upgrades.

Australian listed radiation therapy company Clarity Pharmaceutical fell 5% after announcing a successful $121mln capital raising in which we participated. The funding allows the company to continue to develop its product pipeline with particular interest being on the on-going Secure study, a dose escalation study of the company’s prostate cancer therapeutic product, where we expect further data from the next three patients by mid-year.

Brazilian Rare Earths fell 15% in March on little news after a strong start to the year but have performed very strongly in April after Hancock Prospecting (Gina Rhinehart) announced 5% stakes in Australian listed Lynas, the world’s largest non Chinese rare earth producer, and US listed MP Materials, the second largest. Hancock Prospecting owns 6% of Brazilian Rare Earths. Much media coverage is being given to the situation and the possibility of M&A.